Councilwoman Lori Droste reached a stipulated agreement for a violation her campaign made during the 2018 election under the newly adopted public financing rules. Photo: Courtesy Lori Droste

It’s been almost six months since the November election, but Berkeley’s Fair Campaign Practices (FCPC) Commission is still dealing with election violations from various races.

On Thursday, the FCPC and City Councilwoman Lori Drostereached a stipulated agreement for a violation her campaign made on Aug. 19. The campaign held a campaign kick-off event in a vacant store on College and Ashby avenues owned by Gordon Commercial Real Estate but did not pay to rent the space.

Droste was participating in Berkeley’s new public campaign financing program which stipulates candidates cannot take any non-monetary contributions of more than $50. (State election law does not allow a candidate to use a business space for a fundraiser if the total cost of the event is more than $500). While the space owned by Gordon Commercial was vacant, it was for rent for $6,258 a month. The use of it for eight hours was worth about $750, according to an FCPC staff report.

The “Droste for City Council” campaign admitted it violated Berkeley’s election law and agreed to pay a $750 fine.

“As one of the first participants in the new public financing system, our campaign believed that the use of vacant retail/office space on Ashby Ave. was considered a home/office fundraiser per FPPC Manual 1, Chapter 4, which does not need to be reported,” Droste wrote in an email. “When we were contacted by the FCPC in October 2018 regarding a complaint filed against the campaign, my campaign and the property owner agreed upon $100 payment for the use of the vacant space, and promptly amended our filing to reflect payment. FCPC felt that $100 was an inadequate payment for the space, and based on market rents for other similar spaces, requested we pay $750 for the use of the vacant space for our kick off event. My campaign has agreed to pay the fine, and we accept responsibility for this inadvertent error.”

The commission also decided to dismiss its finding of probable cause that the campaign of Mary Kay Lacey, who ran for District 8 but lost to Droste, violated election law. The Lacey case also highlighted some problems with Berkeley’s new public financing law and prompted the commission to change it.

On March 21, 2018, Stephen Henry, Lacey’s husband and campaign treasurer, made a $50 loan to her campaign. He used the money to open a bank account for the campaign. On May 5, he made a $50 contribution to the campaign, bringing the total amount of his gifts to $100. $50 of that was a loan, which is prohibited under Berkeley election law.

That same day, the Lacey campaign thought it reimbursed Henry $50, bringing it into compliance with the law. But the campaign made out a $50 check to Lacey, not her husband. (The two have a joint account.) So when Lacey applied for public campaign financing on May 7, the books showed Henry had contributed $100. Since the public financing law restricts contributions to $50, the FCPC voted in October that the campaign had probably violated BERA.

Rent Board Commissioner Igor Tregub, who ran for the District 1 City Council seat, got into a similar situation, although he never broke any BERA laws. At one point he had intended to apply for public financing. But he spent $100 of his own money to open a bank account for the campaign, making him ineligible to use public funds.

Henry told the FCPC that this was the first time he had served as a campaign treasurer and that the mistake was inadvertent.

City Clerk reports on the first election involving public financing

City Clerk Mark Numainville drew up a report with statistics about public financing and presented it to the commission. Ten candidates used public financing, according to the report. Two sitting City Council members used the funds, as did seven council candidates who were running for the first time, he said. (One of the objectives of the law voters adopted in Nov. 2016 was to expand the number of candidates seeking office.) One other person using public campaign financing had previously run for office, according to Numainville’s report.

The two incumbents, Droste and City Councilwoman Kate Harrison, were the first to receive the maximum of $40,000 in matching funds, according to the report. They both continued to raise funds in $50 increments after they maxed out.

The new law made for a huge amount of work for the City Clerk and his staff, said Numainville.

“It is estimated that City Clerk staff reviewed an estimated 1,100 separate and distinct public financing transactions and all the associated supporting documentation,” Numainville wrote. “With increased participation in the 2020 mayoral election, the demand on staff time will increase.” (Mayor Jesse Arreguín has already announced he won’t seek public campaign financing.)

Summary of candidate fundraising. Source: City of Berkeley

Commission tweaks the 2016 public campaign finance law

The FCPC also made some changes to the 2016 public campaign financing law based on recommendations made by the City Clerk’s office and the City Attorney’s office. The two offices, which consulted with campaign managers and treasurers about the issues they noted, pointed out that both Tregub and Lacey inadvertently violated the law when opening bank accounts. “One potential barrier to participation is the difficulty of providing campaign start-up costs without exceeding the $50 contribution,” the report said. To remedy that, the FCPC voted to allow candidates to contribute $250 in non-matchable donations to start a campaign.

The law also needs to be clarified “of what constitutes a violation of the program rules and what actions might be deemed substantial, or potentially disqualifying violations,” said Numainville in his report.

The way the public campaign finance law was originally written required that the commission approve all distributions to candidates, according to the report. This meant it took about 17 days to get distribute funds. The FCPC voted to allow city staff to approve distributions, which should streamline the process.

Editor’s note: This article was updated after publication to include a comment from Droste.

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